How is the revenue ramp from the large A&D customer expected to continue, and what is its realistic run rate?

The aerospace customer, which started contributing materially last year, is performing well with unique designs. Management expects consistent performance but notes it's based on the customer's schedule of needs, making precise predictions difficult. “It's not something we spend a lot of time trying to predict because it is really based on their schedule of needs. But as long as we keep performing, we feel like it will be a consistent part of our business.”

How does the DAC solution fit into data centers and AI infrastructure, especially concerning liquid cooling and the opportunity over the next 12-24 months?

DAC is a strong solution for edge data center applications, not hyperscale. It's efficient and up to 75% more cost-effective than traditional HVAC. Liquid cooling is seen as complementary. The edge market is growing as equipment needs to be closer to users, and DAC is well-positioned for this growth, with a positive trajectory expected over the next 1-2 years and beyond. “We have the data that shows we're up to 75% more cost-effective than traditional HVAC deployments in those kinds of environments.”

How should working capital and free cash flow drivers change in the second half, given cash absorption in H1?

Cash was used to pay down the revolving credit facility, reducing interest expense. Excluding this, cash flow was positive. The company plans to continue paying down the line to a minimum balance, after which cash is expected to build. Inventory timing issues in Q2 are expected to resolve, improving working capital. “As we continue -- if you kind of exclude that, it's positive cash flow, but we plan on utilizing the cash to pay down the line closer to that minimum balance. And from there, we should start seeing kind of cash build.”

RFIL

R F Industries (RFIL) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Apr 2026 (Q2 FY26)· Industrials· Jun 15, 2026

Source: earnings call transcript

Executive summary

RF Industries Q2 FY26 — Strong Bookings and Profitability Expansion

RF Industries delivered solid Q2 FY26 results, marked by significant profitability expansion and robust bookings, which drove backlog to multi-year highs. The company's strategy of end-market diversification and operational discipline is yielding tangible improvements, particularly in Custom Cabling, while Integrated Systems are expected to accelerate in the second half. Management is confident in its trajectory, anticipating sequential sales growth in Q3 and continued margin expansion driven by operating leverage.

Highlights

Revenue increased 9% year-over-year and sequentially to $20.7 million.
Gross profit margin expanded to 35.1%, a 360 basis point gain year-over-year.
Adjusted EBITDA nearly doubled year-over-year to $2 million.
Achieved over $26 million in bookings, driving backlog to $20 million at quarter-end.
Delivered positive consolidated net income of $879,000 versus a loss of $245,000 in Q2 FY25.

Concerns

Small cell deployments were slower in the quarter due to timing from key customers working through restructuring or M&A-related details.
Inventory was slightly up to $14.4 million due to timing, with products built in Q2 moving to Q3 shipments.

Guidance & targets

Category	Target	Timeline	Confidence
Fiscal third quarter sales	Increase sequentially over Q2 high materiality	Q3 · FY26	High

RFIL operating KPIs by quarter

RFIL operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Apr 2026 Q2 FY26	Jul 2026 Q3 FY26	Change vs prior quarter
Bookings	$26.3M Bookings for the second quarter were $26.3 million, up $8.4 million versus the previous quarter, driving backlog to $20 million as of April 30, a $5.6 million increase quarter-over-quarter. Source: earnings call transcript	$22.5M Third quarter bookings were $22.5 million, representing a book-to-bill ratio of approximately 0.94x, and backlog at July 31 was $18.6 million. Source: earnings call transcript	-14.4%
Backlog	$20M Bookings for the second quarter were $26.3 million, up $8.4 million versus the previous quarter, driving backlog to $20 million as of April 30, a $5.6 million increase quarter-over-quarter. Source: earnings call transcript	$18.6M Third quarter bookings were $22.5 million, representing a book-to-bill ratio of approximately 0.94x, and backlog at July 31 was $18.6 million. Source: earnings call transcript	-7%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Bookings $26.3 million Q2 FY26

Up $8.4 million vs previous quarter

Strongest bookings quarter in many years, driving backlog.

Backlog $20 million April 30, 2026

$5.6 million increase QoQ

Provides better visibility into the second half of the fiscal year and supports expectation of continued growth.

Backlog $20.1 million June 15, 2026

Current backlog as of the call date, indicating sustained momentum.

Product announcements

Product	Type	Timeline	Details
New products across thermal cooling and RF passives	launch	Q2 FY26

Risks & headwinds

Slower small cell deployments Q2 FY26, expected to resume and increase through H2 FY26

Integrated Systems underperformed expectations in Q2

Mitigation:Viewed as a temporary timing issue, not a structural change in underlying demand, due to key customers' restructuring or M&A-related details.

Tariff environment uncertainty Near-term (July)

Key decisions still ahead in July

Mitigation:Monitoring closely and prepared to adapt; diversification of supply chain and ongoing strategic sourcing efforts position the company to manage.

Inventory timing impact on working capital Q2 FY26, expected to improve in Q3 FY26

Inventory up to $14.4 million from $12.6 million last year

Mitigation:Products built and ready to ship in Q2 were moved to Q3; expected to improve inventory turns and working capital as releases come through.

Q&A highlights

Is the current strength in Custom Cabling the new normal, or will Integrated Systems rebalance the mix?

Management is pleased with Custom Cabling's performance and expects Integrated Systems to grow and be a significant part of the business in the second half, despite underperforming in Q2 due to timing issues. The diversification strategy aims for different segments to lead at different times.

“We've tried to diversify in such a way that not every quarter is going to look exactly the same largest customer or 2 perspective nor from a sort of a product makeup. We're enjoying the fact that the pistons are kind of firing in all different places and we're seeing that diversity hit.”

asked by Matthew Maus · answered by Robert Dawson

2 min read 6 chapters

Detailed narrative

Strategic Focus and End Market Diversification

RF Industries continues to execute on its strategy of improving profitability, diversifying end markets, and scaling the business in a disciplined way. The company is positioning itself as a solutions provider, leading to increased customer engagement, particularly in the wireless carrier ecosystem and related infrastructure providers. Key target end markets include aerospace, data center infrastructure, venues, and transportation (airports, rail, mass transit).

Direct Air Cooling (DAC) System Expansion

The company's DAC solutions are gaining adoption across various use cases, particularly for edge data center applications. Management highlights DAC's unique efficiency and cost-effectiveness, claiming it can be up to 75% more cost-effective than traditional HVAC deployments in these environments. The focus remains on edge deployments rather than hyperscale data centers, where DAC is seen as complementary to liquid cooling technologies.

Operational Efficiency and Cost Management

Operations remain a key differentiator, with U.S.-based manufacturing and a diversified supply chain providing flexibility. A cost reduction program, driven by supplier negotiations, transformation initiatives, and tariff management through source relocation, is delivering strong results in the first half. The company is closely monitoring the tariff environment, with key decisions expected in July, and is prepared to adapt.

Inventory and Working Capital Management

Inventory levels increased slightly in Q2 due to timing, as products built and ready to ship were moved to Q3. Management expects inventory turns and working capital to improve as these shipments are released. The company is actively managing working capital to strengthen liquidity and capital position, aiming to reduce net debt as positive cash flow continues.

Russell 3000 Index Inclusion

RF Industries announced its inclusion in the Russell 3000 Index, effective June 26. This inclusion is expected to enhance the company's visibility with institutional investors, improve liquidity, and broaden its shareholder base, reflecting a positive development for its market presence.

Key Customer Concentration

A large aerospace and defense customer, acquired last year, now accounts for approximately 14% of total revenue, up from 10% in the prior quarter. This relationship is performing well, with RF Industries providing unique designs and custom cabling solutions tailored to their specific needs. The company expects this to be a consistent part of its business, dependent on the customer's schedule of needs.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.